Analysis of Bitcoin’s unspent transaction outputs (UTXOs) suggests that investors are now capitulating, a trend historically associated with the lows of bear markets. According to CryptoQuant analyst known as Darkfost, the ratio of UTXOs spent at a profit compared to those spent at a loss has reached its lowest point in this bear market cycle. This marks the first instance of this signal being triggered since the onset of the current correction, indicating that significant levels of UTXOs are being spent at a loss, which reflects a broader trend of capitulation among investors.
This metric implies that the market may be entering a bottoming phase, potentially signaling a strategic opportunity for accumulation. The last time this ratio fell to such low levels was in mid-2023, when Bitcoin prices plummeted to approximately $26,000. Darkfost remarked that periods like these have historically been profitable for long-term investors, coinciding with times when the majority of participants lose interest and give up.
However, he emphasized that the process of recovery could take time and is not immediate. Another analyst, known as DurdenBTC, similarly noted that the bottom signal detected has historically aligned with the cycle lows since 2016, but cautioned that the price action may still feel uncomfortable for an extended period. “If buying here were comfortable, the signal wouldn’t exist,” he stated.
In a further analysis, Darkfost indicated that long-term holders are beginning to enter a capitulation phase, as evidenced by the Spent Output Profit Ratio (SOPR) moving increasingly into negative territory for this group. He attributed much of this correction to a surge in Bitcoin inflows from short-term holders into exchanges.
Onchain analytics firm Swissblock, commenting on the broader market dynamics, noted that while Bitcoin appears to have surpassed its initial breakdown, it remains in a phase of base formation. Although there is some stabilization in price, they suggested that the momentum remains heavily negative, with Bitcoin impulse only recently returning to a neutral state.
Amid these developments, heightened uncertainty and potential selling pressure loom on the horizon, particularly following recent military actions by the US. Over the weekend, US fighter jets conducted strikes on ten Iranian military targets in response to an Iranian drone attack on a commercial vessel, as reported by Central Command. This geopolitical tension influenced market sentiment, contributing to a price dip in Bitcoin to $59,800 in early trading on Sunday before it managed to recover to around $60,100.
